You just got there. Years of grinding and studying, enduring the stream of bad beats, bad runs, whiffed flops, and dead cards. A decent size six figure cash.
Before you buy the Maserati, the Condo in Aruba, or the evening at XS (which costs about the same), pause for a second to ask yourself: how should I use this wisely?
There are many choices tugging that big looking sum in many directions. They are competing for a piece of it, and without thoughtful reflection the money will go where it is easiest, and perhaps not where it is wisest.
Some of those demands are:
- Taxes – no avoiding this one!
- Your future
- Expanding your bankroll
- Enhancing your lifestyle
The easiest are, of course, numbers 3 and 4. Go ahead, hit XS, but when your head clears, here are a few things to think about.
You need a plan. You need a budget. You need to save.
A plan depends on your life goals. Do you have a vision of what you want your life to look like in 5, 10, 20 and 40 years. (If you don’t, a few sessions with a Healthy Poker life coach might be a good idea!)
Life goals require money (many of them). The only way to make sure that money is there when you need it is to plan with an advisor experienced in financial planning, such as a certified financial planner (CFP®).
Putting the future first in this way will restrict some choices in the present. But even if you are 21, and the future seems very very far away, beginning a modest contribution now (and regularly) could mean the difference between a lavish future with lots of freedom, or one where you will have to continue to grind, or do something else well past when you would like to.
Now that you have a plan, you can put some of that windfall away a piece of it as if you never really had it. Saving (rather than borrowing) became almost un-American during the boom years of the last decade. Why save if house prices, stock markets, and the poker world would continue to boom. The first two collapsed in 07 and 08, and in 2011, the DOJ ruling proved that the even explosive growth in poker was fragile. Again, a CFP® will help you balance risk, return and investment horizon to help you work toward your long term goals. They will also help with diversification which may help to reduce variance in financial outcomes. We know you understand variance!
With the future now amply provided for, we have to live in the present. That is where good budgeting comes into play. Are you spending too much for that car insurance. Are you getting at least 1% cash back on your credit card purchases? Do you have an adequate level of health insurance? Are your travel expenses under control? Just how much is your monthly discretionary income. Go ahead, treat yourself well. You’ve earned it, so award yourself a generous but prudent monthly allowance and stick to it!
Of course, what you also need to do is continue (or begin) sensible bankroll management practices. One up and coming pro was down to his last 3k. Through careful grinding at micro tournament stakes he ran it up to 10k, took a shot at a $340 satellite, won that and then won nearly 200k in the event. As many of us do, he increased his ABI by 40 fold and his expenses (since online is no longer an option) went from a few hundred per year, to tens of thousands. Six months later, two thirds of that big cash had been ploughed back into poker. Needless to say, he is planning now!
Another pro, broke many times despite being a household name said, “I wish someone would have wacked me over the head years ago to be smart with my money because now I don’t have any.”
Don’t be that guy!
You want people in the industry to say, “not only is he a great poker, he is unbelievably clever with his money.”
Enjoy that 1200 dollar bottle of Krug, but pick up the phone to a specialist and make sure you have the funds to drink that well into that far-away old age.
Allan Haupert is a CERTIFIED FINANCIAL PLANNER ™ and amateur poker player. Contact him through firstname.lastname@example.org or his office at 414-763-3867. Securities offered through LPL Financial, Member FINRA/SIPC.